The company was in business of publishing newspaper for almost a century. The main ingredient required for the purpose is news print. Hence, it is expected, the company would know the prevalent market rate. In any event, when the respondent agreed to give rebate, the company did not raise any protest. Their protest came when the respondent insisted payment and threatened legal action. The defence so advanced was not bona fide.
At time when query was raised under the head ‘Selling & Distribution Expenditure’, had there been insistence that TDS was required to be deducted and the amount specified to the tune of Rs. 22,70,869 was not required to be allowed as Trade Incentive without deducting TDS, the same ought to have been reflected somewhere in the computation of income and that would have bearing on the computation itself.
Normally where a transaction is undertaken by a person who is a businessman, the question as to whether investment in shares is an income from the line of business could be taken as adventure in the nature of trade and it should not pose a problem, since such transactions would be either incidental or ancillary to the business, although the transactions undertaken may not have a direct bearing to the business already undertaken by the assessee.
The assessee, a chamber of commerce and industry, in the course of pursuing its objects rendered several services, such as, certification, committee room services, secretarial services and facilities, energy audit, etc. to its members and non-members for a fee. It was registered under section 12A. From the assessment year 1996-97 up to the assessment year 2005-06, it was granted exemption under section 11.
HC held that CIT had rightly rejected the application of the petitioner for approval under Section 10 (23C) (iv) of the Act on the ground that the petitioner has not rendered its services directly to the farmers but is rendering its services directly to its clients/agents who are engaged in trading of the certified seeds with profit motive and therefore its activities are not for the ‘advancement of any other object of general public utility’ and hence not for ‘charitable purpose’ in view of second limb of the first proviso to Section 2 (15) of the Act.
For the aforesaid reasons, we do not find that the Income Tax Appellate Tribunal committed any error in arriving at findings that the interest are not deposits of non-SLR funds and the cooperative bank will qualify for exemption under Section 80P (2) (a) (i) of the Act.
Considering the year during which the amount by way of interest from the trade debtor had been received by the assessee and has been treated as business income, it has to be held as derived from its undertaking, thus making it eligible for deduction under section 80-IC of the Act.
In the result, the substantial question of law framed in ITA No. 1132/2007 is answered in the negative in favour of the Revenue and against the assessee. However, an order of remit is passed directing the Assessing Officer to make a fresh assessment in accordance with law. In ITA No. 583/2010, no substantial question of law arises and it is accordingly dismissed. No costs.
Being a public company, ordinarily, provisions of section 179(1) of the Act cannot be applied. However, if the factors noted by the Assistant Commissioner in his impugned order dated 15.4.2002 and highlighted by us in this judgement are duly established, it would certainly be a fit case where invocation of principle of lifting of corporate veil would be justified.
Held that, In the case of LPG cylinders, the transaction was only a financing transaction and was not a lease as there is no material to show that the assessee became the owner of the cylinders and leased them to Janta; in the case of airjet spindles and positar disc, the very existence of the assets and the genuineness of the purchase of the assets by the assessee was not proved. In both the cases, therefore, the assessee was not entitled to depreciation.
